Daily Mortgage Rate Lock Advisory

Rate Lock Advisory – Wednesday Nov. 26th

Wednesday’s bond market has opened in positive territory following weaker than expected economic news. The stock markets are currently in positive ground after initially opening with losses. The Dow is now showing a 42 point gain while the Nasdaq is up 28 points. The bond market is currently up 19/32, which should improve this morning’s mortgage rates by approximately .250 of a discount point.

The first piece of data released this morning was October’s Durable Goods Orders that showed a drop of 6.2% in new orders and revised September’s orders lower than previously announced. Analysts were expecting to see a 2% drop in October’s orders, meaning that demand for big-ticket products was much weaker than thought. In fact, this was the largest monthly decline in approximately two years. That is good news for bonds and mortgage rates, because the slowing economic activity makes mortgage related bonds more attractive to investors.

The second was Oct ober’s Personal Income and Outlays data, which gave us mixed results. The bad news came in the income portion of the report that revealed a 0.3% rise in income compared to forecasts of a 0.1% increase. This means that consumers have more money available to spend than was expected. However, the good news was that they spent less than analysts had predicted. What was supposed to be a 0.7% decline in spending actually came in at a 1.0% drop. With consumer spending making up two-thirds of the U.S. economy, the weaker than expected spending is taken as good news for bonds.

This month’s revision of the University of Michigan’s Index of Consumer Sentiment was also favorable to bonds and mortgage rates with a reading of 55.3. This was much lower than the 58.0 that was expected, indicating that consumers were less optimistic about their own financial situations than analysts had thought. This means they are less likely to make large purchases in the near future.

The last report of the day was October’s New Home Sales figures that showed that sales of newly constructed homes fell to its lowest level in almost 18 years. While this is generally good news for bonds and mortgage rates, this data is not considered to be oh high importance to the markets, therefore, its impact ton today’s trading and mortgage rates has been minimal.

The bond market will close at 2:00 PM ET today ahead of tomorrow’s Thanksgiving Day holiday and will reopen Friday morning. There is no relevant data scheduled for release Friday, so I am expecting to see a very light and thinly traded day. The bond market will also close at 2:00 PM Friday, so look for little activity that day.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Lock if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my clos ing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.